The Vietnam Dong and Gold Rates: A Volatile Dance in May 2025

The Vietnamese economy is at a crossroads, with the dong’s steady depreciation and surging gold prices creating a complex landscape for investors. As of May 5, 2025, the Vietnamese currency faces mounting pressure, while gold continues its ascent—a dynamic that demands careful scrutiny.

The Vietnam Dong: A Weakening Currency in Focus

The State Bank of Vietnam (SBV) set the official reference rate for the dong at 24,944 VND/USD on May 5, a slight dip from April’s highs. However, commercial banks, operating within the SBV’s ±5% trading band, offer sharply higher rates. Vietcombank, for instance, sells dollars at 26,190 VND/USD, while BIDV’s selling rate reaches 26,180 VND/USD. These rates reflect market skepticism about the dong’s stability, as the SBV’s reference rate lags behind commercial realities.

The SBV’s May forecast paints a bleaker picture: the dong is projected to end the month at 26,197 VND/USD, a 3% decline from May’s starting rate. This trajectory aligns with long-term trends, as the dong is expected to hit 28,058 VND/USD by December 2027, driven by widening trade deficits and U.S. dollar strength.

Gold’s Rise: A Safe Haven in Chaos

While the dong falters, gold shines. On May 5, 24K gold traded at 84,830,249.58 VND per ounce, a 0.7% daily gain. This follows a 22.24% year-to-date surge, with prices hitting a 2025 peak of 81,741,560 VND per ounce in April. Yet May’s volatility is extreme: the May 5 price saw a “very high” volatility status, with swings between 84.22 million and 85.11 million VND.

The surge isn’t just local. Vietnam’s gold prices are tied to global USD-denominated rates, with the exchange rate amplifying domestic costs. On May 5, the dollar’s strength (1 USD = 26,017 VND) meant imported gold became pricier for Vietnamese buyers. Retail premiums further inflated costs: Saigon Jewelry Company’s 24K bars carried a 4.36 million VND per tael (37.5g) markup, reflecting production and tax burdens.

The Interplay: Currency Weakness Fuels Gold Demand

The dong’s decline and gold’s ascent are inextricably linked. A weaker currency reduces purchasing power, pushing investors toward hard assets like gold. This dynamic creates a self-reinforcing cycle: as the dong falls, gold becomes both a hedge and a speculative play.

Consider the math: if the dong depreciates to 26,197 VND/USD by month-end, gold’s USD price (assuming no global change) would automatically rise in local terms. Conversely, if global gold prices climb, Vietnam’s prices would spike further.

Risks and Opportunities on the Horizon

Investors face a high-stakes balancing act. The dong’s projected decline offers opportunities for dollar holders but poses risks for businesses reliant on imports. Meanwhile, gold’s volatility demands caution: a 2.43% weekly drop in May prices, despite daily gains, underscores its unpredictability.

The SBV’s hands are tied. Raising interest rates could curb depreciation but might stifle economic growth. Conversely, allowing the dong to float freely risks a collapse.

Conclusion: Navigating the Storm

The data paints a clear path: the dong is likely to weaken further, and gold will remain a critical hedge. Investors should:
1. Hedge currency exposure: Use USD-denominated assets or forwards to mitigate dong losses.
2. Monitor gold’s global trends: A U.S. rate hike or geopolitical instability could supercharge Vietnam’s gold prices.
3. Watch central bank actions: The SBV’s next moves—whether to tighten policy or intervene in markets—will set the tone for both assets.

The numbers are stark: a 3% monthly decline in the dong and a 22% YTD rise in gold signal an economy in flux. For now, gold’s allure as a safe haven outweighs its risks—but in Vietnam’s volatile markets, prudence is paramount.

The dance between the dong and gold isn’t over. For investors, the next steps require precision—and a wary eye on both local and global tides.